FAQ

Q: How will rUSD maintain its peg? How will the protocol stay solvent?

A: Reservoir provides a peg stability module that allows anyone to convert rUSD to USDC at parity and at no cost. rUSD issuance will be calibrated to avoid any liquidity crunch scenario. An important aspect of the rUSD peg is the assets that collateralize the stablecoin protocol. With a healthy mix of liquid DeFi assets and RWA collateral, the protocol provides a significant differentiating factor in higher yields and how uncorrelated and more stable it is to the digital asset market.

Q: How does the protocol manage periods of high market volatility?

A: One of the core mechanisms that expand and contract the balance sheet is the variable rate on crypto backed loans. When demand for rUSD is high, the variable increases which cause a contraction as variable rate borrowers pay back their loans. The balance sheet will be relatively uncorrelated from the broader crypto market volatility as low-risk real world assets exists on the balance sheet.

Q: How does the protocol safely store and manage funds? A: Reservoir uses Gnosis Safe and Fordefi's institutional MPC wallet to custody and transact onchain funds with multi-sig approval. Reservoir leverages Gnosis Safe to enable approvals for smart contract function and parameter changes.